Hook & thesis
Ferrari has quietly shifted from corporate headline risk to capital returns and operational reset - and the market has started to price that. The company announced completion of its multi-year buyback program and the first tranche of a new program on 12/16/2025, and a shareholders' agreement update landed on 01/03/2026. Those two items materially reduce governance and liquidity overhangs that have weighed on the stock.
Price action gives us a concrete trade: RACE is trading at $376.61 (last trade) after trading above $517 earlier in the cycle. The re-rate has left upside to previous trading levels and, critically, a cleaner risk profile. We are upgrading our tactical rating and laying out an actionable swing trade with defined entry, stop and layered targets.
Why the market should care - business + fundamental driver
Ferrari is not a volume OEM; it is a scarcity luxury brand. In 2024 the company sold 13,752 vehicles at an average price above EUR 480,000. Product sales and spare parts make up roughly 86% of revenue, with sponsorship, racing and lifestyle activities contributing the rest. Regional exposure is concentrated in EMEA (47%) and the Americas (33%), with mainland China/HK/Taiwan at 8% and the rest of Asia at 12% - a geographically diversified premium footprint but with outsized exposure to Europe and the U.S.
Why that matters now: the company's high average unit price plus constrained supply means profit sensitivity to unit-mix and pricing is large but controllable. Management has historically prioritized scarcity to protect brand equity, and the recent pattern of progressive dividends (annual declared cash dividend rose from EUR 0.71 in 2018 to EUR 2.986 declared on 02/20/2025) and buybacks signals continued focus on shareholder returns rather than aggressive volume growth.
Hard facts from the tape
- Last trade: $376.61 (market snapshot today).
- 2024 retail footprint: 13,752 cars sold, average price > EUR 480,000.
- Dividend progression: 2019 EUR 1.03 -> 2024 EUR 2.443 -> declared 02/20/2025 EUR 2.986 (pay date 05/06/2025).
- Shareholder & capital return developments: completion of the 2022 multi-year buyback program and announcement of a new multi-year buyback tranche on 12/16/2025; shareholders' agreement update on 01/03/2026.
- Price re-rate: stock peaked near $517.56 in mid-2025 and now trades at ~$376.61 - a decline of roughly 27% from the high.
Valuation framing
We do not have a current market cap or consensus model in this write-up, but the observable price re-rating is the key signal. A drop from the $500+ area into the mid-$300s represents a significant compression in implied premium for a brand-led automotive luxury name. Historically, Ferrari has priced at a premium to broader auto and luxury peers because of scarcity and return of capital; the recent move looks more macro- and sentiment-driven than a sudden change in underlying economics (no broad disclosure of a demand collapse in available company facts).
Given the announced buyback activity and rising dividend cadence, the balance between returns and growth should support a re-acceleration in price multiple if operational metrics - orders, ASPs and delivery cadence - stabilize. In plain terms: the valuation that was expensive above $500 looks back in play once headline risk fades and buybacks reduce float.
Catalysts (2-5)
- Buyback execution - active repurchases reduce float and support EPS per share; watch daily/quarterly announcements after the 12/16/2025 program start.
- Shareholder agreement clarity - the 01/03/2026 release materially reduces governance overhang; further confirmations or lock-ups would be positive.
- Order & delivery updates - any signs of order-book resilience or ASP improvement would validate the premium multiple reset.
- Dividend policy continuity - further increases or explicit payout targets would reframe the stock as income-plus-growth.
Trade idea - actionable framework
We recommend a tactical long with the following staged execution:
- Entry: 370 - 380 (aggressive layer at current print $376.61).
- Initial stop: 340 (roughly 9% below a $375 entry; cut if price breaks and closes below this on a daily basis).
- Primary target (near-term): 420 - 440 (first resistance band; reclaiming $420 argues for multiple expansion).
- Secondary target (base case): 480 (retest of the mid-2025 consolidation area).
- Stretch target (bull case): 520+ (revisit of the earlier $517 peak if buybacks accelerate, dividends rise and orderbook confirms).
Risk/reward from a $375 entry to first target $430 is ~15% upside vs ~9% downside to the stop - asymmetry is favorable for a tactical trade. Position sizing should be appropriate: limit exposure to a single-digit percentage of portfolio risk given event sensitivity (e.g., 2-4% of portfolio risk allocated to this idea depending on investor risk appetite).
Why this setup feels de-risked
Two near-term developments reduce headline risk: the buyback program restart (12/16/2025) and the shareholders' agreement press release (01/03/2026). Both limit the likelihood of activist surprises or large uncontrolled selling. At the same time, Ferrari's demonstrated ability to return cash to shareholders (dividend increased to EUR 2.986 in 2025) reduces the probability of a permanent multiple derating if operational metrics remain steady.
Risks & counterarguments
- Macro-driven luxury demand shock: A broad slowdown in high-net-worth consumer spending could compress ASPs and orders. Ferrari's scarcity model helps, but it is not immune to fierce macro pullbacks.
- Execution on electrification/product transition: The luxury auto market is moving to electrified platforms. If Ferrari's product cadence or R&D spending fails to convince investors of future competitiveness, multiples could re-rate lower.
- Geopolitical / China exposure: Mainland China/HK/Taiwan account for ~8% of revenue and broader Asia 12%; any regional demand shock or regulatory friction could dent growth.
- Buyback signaling risk: If the announced buyback is smaller than implied or executed slowly, the market may be disappointed and the stock can fade; execution matters.
- Liquidity & volatility: The stock has experienced sharp volume spikes and large weekly moves; tight stops are necessary as intraday volatility can trigger exits.
Counterargument: Some investors will say the valuation reset is not yet justified because structural risks around product transition and global macro remain. That is fair: if investors demand certainty on EV roadmap or if orders show clear deterioration, the premium multiple may not return. The trade above accepts that risk by using a defined stop and layered targets - the thesis is contingent on buyback execution and order stability, not on near-term miracles in sales volume.
Conclusion & what would change my mind
Conclusion: Ferrari represents a tactical long opportunity. Governance overhangs have meaningfully eased with the 01/03/2026 shareholders' agreement release and the 12/16/2025 buyback announcement, and the company continues to return capital (dividend progression through 2025). The stock is materially off its mid-2025 highs, creating an asymmetric setup for a swing trade with clearly defined risk controls.
What would change my mind: either a clear deterioration in order books/ASPs or evidence that the new buyback program will be token/slow would invalidate the setup. Conversely, accelerating buyback cadence, another dividend increase or an explicit production/order beat would materially strengthen the bull case and justify moving targets higher.
Practical checklist for traders
- Enter in the 370-380 band; add only on constructive price action or intraday pullbacks.
- Use a daily close below 340 as the stop signal and reassess on any gap below the stop.
- Scale out into the 420-440 band, re-evaluate on repurchase flow statements and any order/delivery data points.
- Keep position size controlled given event risk; consider reducing exposure into the 480 area unless buyback execution is visible.
Disclosure: This is a tactical trade idea focused on defined risk/reward. Always consider position sizing and portfolio context before trading.